IN THE HIGH COURT OF ESWATINI
Case No. 793/2018
In the matter between:
THE FINANCIAL SERVICES Applicant
TEMNOTFO SAVINGS AND CREDIT Respondent
Neutral citation: The Financial Services Regulatory Authority and Temnotfo Savings and Credit Co-operative [793/18]  SZHC 160 (19th July, 2018)
Coram: FAKUDZE, J
Heard: 3rd July, 2018
Delivered: 19th July, 2018
Summary: Interpretation of statutes – Question is Respondent governed by the Financial Regulatory Authority Act 2010 or by the
Co-operative Societies Act, 2003? Determining factor is whether Respondent is a Savings and Credit Co-operative Society licenced under the F.S.R.A Act 2010 or not to provide financial services to its members or not herein the Act described as “SACCO.” Section 2 of F.S.R.A Act, 2010 defines “SACCO” as a savings and credit co-operative society licenced under this Act to provide financial services to its members. The Constitution of the Respondent describes Respondent as “Temnotfo Savings and Credit Co-operative Society Limited.” The objectives of the Respondent also bear testimony to the fact that it is a SACCO – Respondent qualifies to be regulated by the F.S.R. A Act, 2010 – Respondent can also be wound up by the F.S.R.A in terms of that Act – Applicant has established that liabilities of Respondent more than assets – Therefore same should be placed under liquidation – Rule nisi dated 25th May, 2018 hereby confirmed.
 The Applicant is the Regulatory Authority in respect of all non-banking financial services providers which was established under the Financial Services Regulatory Authority Act, No. 2 of 2010.
 The Respondent is a non-banking financial services provider, which was established and registered as a Co-operative Society in terms of the Co-operative Societies Act, 2003.
 On the 25th May, 2018, the Applicant filed an Application under a Certificate of Urgency for an order in the following terms:
1. Dispensing with the Rules of Court relating to time limits, manner of service and hearing the matter as one of urgency;
2. Condoning Applicant’s failure to comply with the Rules of Court;
3. That the Respondent is hereby interdicted and restrained from accessing and/or operating or conducting, any transaction on the following bank accounts:
3.1. Standard Bank Account No: 9110003365126;
3.2. First National Bank Account No: 62332546764;
3.3. Stanlib Swaziland Account No: 551824664;
4. That the Respondent be wound up or placed under liquidation;
5. That a Rule Nisi do hereby issue calling upon the Respondent and all interested parties to show cause, on a date to be determined by this court why the Order No. 4 above should not be made final;
6. That Mr. Ndumiso Mamba is appointed the liquidator of the Respondent;
7. Costs of suits to be costs in the liquidation;
8. Further and/or alternative Relief.
 The Application is opposed by the Respondent who has raised points of law which points were argued together with the merits of the Respondent’s case.
 The Applicant contends that the question this court must determine or ask is is the Respondent a savings and credit co-operative society? If the court comes to the conclusion that it is a savings and credit co-operative, then the Financial Services Regulatory Authority Act, 2010 applies.
 The Applicant argues that in Section 2 of the Financial Services Regulatory Act, 2010, SACCO is defined as a “savings and credit co-operative society licenced under the Act to provide financial services to its members.” The Co-operative Societies Act, 2003, provides for the formation, registration and dissolution of a Co-operative and the Financial Services Regulatory Authority Act, 2010 deals with the licensing of a Co-operative if it is a Savings and Credit Co-operative. This means that immediately a Co-operative assumes the status of a savings and credit, it must then be licensed by the Financial Services Regulatory Authority. So if a society does not have the savings and credit element, the Authority does not license it.
 The Applicant further argues that at page 89 of the Book of Pleadings, the Respondent, by its own admission, confirms that it is a SACCO. Paragraph 4.1; 4.3; 5.1; 5.5; 7.1; 7.2; 7.3 and 7.4 all make mention of the fact that the Respondent is a SACCO.
 The Applicant contends that what has been said above seeks to prove that the Respondent is a SACCO and therefore licenced by the Financial Services Regulatory Authority, 2010.
 The Applicant alleges that it had instituted the proceedings against the Respondent for its winding up or liquidation on the grounds that:
9.1 The Respondent is insolvent, in that its liabilities exceed its assets and;
9.2 Its condition is very weak due to poor financial condition, lack of Board of Directors’ oversight and strategic direction;
9.3 Lack of policies and procedures which resulted in a significantly weak internal control environment; and
9.4 The failure by its Board to act on recommendations of its external auditors.
 The Applicant has been concerned about the poor state of the Respondent as reflected in the Respondent’s auditor’s opinion. An inspection was duly conducted on the operations of the Respondent and the results confirmed that the Respondent has not been properly run.
 It is Applicant’s contention that on the 10th May 2015, Respondent’s Board told its membership the following (as seen on page 50 of the Book of Pleadings) that:-
11.1 The Respondent is insolvent;
11.2 Liabilities exceed assets by more than 100%;
11.3 The balance sheet as at 30th June 2014 indicates a deficit of E2.69 million (assets E1.75 million and liabilities E4.44 million)
11.4 That the Respondent has failed to make a surplus for the past 12 years.
 Although the Respondent argues that it has taken serious measures to reduce its debt, still it remains insolvent up to this day. The Audit Report of 2017 bears record to this fact. The Applicant therefore prays that the Respondent be liquidated or wound up in terms of the Financial Services Regulatory Authority Act, 2010.
The Respondent’s case
 The Respondent states that the High Court has no jurisdiction to hear the matter because the Respondent does not fall under the Financial Services Regulatory Authority Act, 2010 since it is a Co-operative and not a SACCO. Section 104 of the Co-operative Societies Act, 2003 expressly states that a court of law shall not have jurisdiction in any matter concerned with the winding up of a co-operative. It follows therefore that Section 73(2) of the Financial Services Regulatory Authority, 2010 is not applicable in this case and the court should find against the Applicant for approaching the court prematurely or under the wrong law.
 The other issue pertains to the Appointment of Mr. Ndumiso Mamba as the liquidator. The Respondent argues that the Financial Services Regulatory Authority Act, 2010 does not prescribe the powers of a liquidator whereas the Co-operative Societies Act, 2003 does. The office of liquidator is a public office. Someone who has lost public office should therefore not qualify to be a liquidator in terms of the Co-operative Societies Act, 2003. This argument is based on the fact that the operative law is the Co-operative Societies Act, 2003
 The third issue the Respondent is raising is that there was non-disclosure of material facts which led to the granting of the Interim Court Order. The Applicant misled the court that the Respondent is committing an act of insolvency yet its balance sheet was showing a great improvement in the recent years. The Applicant further failed to disclose that the parties had agreed or ordered for the appointment of an Administrator. Thus the exparte application was in bad faith.
 On the issue of urgency, the Respondent states that the Applicant knew at least from 2015 that the Respondent had more liabilities than assets hence to come to court after 3 years is an abuse of court process. The Applicant is relying on old information. The Rule nisi should therefore be discharged not only based on the Applicant’s failure to disclose the material facts but also on the fact there is no urgency in the filing of the application.
 The Respondent finally submits that the Applicant has not filed a Replying Affidavit: thus they have accepted the version of the Respondent that the
co-operative might look insolvent but it is not insolvent. The Respondent is able to service its debts inclusive of paying its rentals and salaries. Its creditors are being serviced. The Respondent is not conducting its business in a manner likely to lead it to insolvency. Since the Respondent’s version is not controverted or explained, it should be accepted by the court.
Court’s observation and conclusion
 Since the main issue centres around the interpretation of the Financial Services Regulatory Authority Act, 2010 and the Co-operative Societies Act, 2003, there is not much case law on the subject. Applicant’s case is simply that the Respondent is for all intents and purposes a SACCO for purposes of the Financial Services Regulatory Authority Act, 2010. Although it is formed, registered and dissolved in terms of the Co-operative Societies Act, 2003, it is licenced by the Authority by virtue of Section 5 (b) (c) and (d) which states that:-
“5 The Authority shall have such functions as are necessary to further its objects and in particular shall
(b) Licence, regulate monitor and supervise the conduct of the business activities of financial services providers;
(c) Carry out investigations and take measures to suppress illegal, dishonorable and improper practices, market abuse and financial fraud in relation to any activity in the financial services sector;
(d) Take measures for the better protection of stake holders of financial services.”
 Immediately a co-operative becomes savings and credit facility, it then falls under the Financial Services Regulatory Authority.
 The Respondent by its own admission at page 89 of the Book of Pleadings, confirms that it is a SACCO. Paragraphs 4.1; 4.3; 5.1; 5.5; 5.7; 7.1; 7.2; 7.3 and 7.4 all make mention of the fact that the Respondent is a SACCO. This court is inclined to agree with the Applicant that the Respondent is a SACCO. This is further confirmed by the Constitution of the Respondent. Under “name” the Respondent is referred to as “Temnotfo Savings and Credit Co-operative Society Limited.” Under objectives the preamble states that the objectives of the society are to promote the economic interest of the members through a free association of people with a common bond to save and lend money to one another at reasonable interest rate for…………..”
It therefore follows that Section 100 of the Co-operative Societies Act, 2003 does not apply with respect to the Respondent.
 On the issue of the solvency of the Respondent, Section 46 of the Financial Services Regulatory Authority Act, 2010 provides that:-
“46 An Authorised financial services provider shall, at all times in the conduct of business, act according to the principles of best practice and in particular, shall:-
- act honestly and fairly in the best interest of stakeholders and the integrity of the market;
- maintain adequate financial resources to meet the business commitments of the financial services provider and withstand the risk to which the business of that financial services provider is subject;
- Organise and control the internal affairs of that financial services provider in a responsible manner.”
JUDGE OF THE HIGH COURT